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Get ready: the Industrial Demonstrations Program is moving forward

October 10, 2023

Applications are in! 

The Industrial Demonstrations Program (IDP), which is the largest U.S. federal funding program for industrial decarbonization included in the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA), just reached an important milestone: Applications for the Department of Energy’s (DOE) IDP have been submitted! 

The IDP is important because it focuses on some of the highest emitting and hardest to abate industries in the U.S. and has great potential to drive global impact and deeply reduce GHG emissions. The program has a mandate to be transformational, moving industrial sectors to decarbonization. DOE expects to announce selections this winter, including:

  • $6.3 billion investment for technologies to decarbonize iron and steel, cement and concrete, chemicals and refining, food and beverage, paper and forest products, aluminum, and other manufacturing and cross-cutting technologies. 
  • Funding for projects to advance emissions reductions for high emissions industrial materials production processes, medium- and high-temperature heat generation, chemical production processes, and manufacturing and energy efficiency. 

DOE’s Office of Clean Energy Demonstrations (OCED) — which is leading on multiple new demonstration programs including IDP, Regional Clean Hydrogen Hubs, and Direct Air Capture Hubs — is now reviewing applications from technology developers, manufacturers, universities, laboratories, firms, state and local governments, environmental groups, and community-based organizations. OCED must obligate funds by Sept. 30, 2026, when projects should begin construction. Time is limited to select, prepare, and build projects — and federal agencies, states, and the private sector should start acting now. 

What’s Next? 

DOE will review applications for projects that advance its program priorities to maximize the transformative potential for deep decarbonization, timeliness, market viability, and community benefits. These priorities are tied closely to IRA priority considerations, including the degree to which the proposed project contributes to a portfolio that enables the highest potential for GHG reductions in industry, the degree to which the proposed project contributes to a portfolio that provides the greatest benefit for the greatest number of people, and the extent to which the proposed project contributes to a portfolio that ensures the maximum potential for the output of selected projects to be purchased and builds demand for low-carbon products. 

To help IDP funded projects accomplish the goals of the program, states will need to make policies and investments conducive to industrial decarbonization, while industry will need to collaborate with communities to make sure federal dollars are transformative, and address barriers and opportunities on the ground. Other federal agencies will need to coordinate with DOE where they have related programs and authorities.  

Recommendations for agencies, industry, and states

The opportunities for this program are enormous, and realizing them will require strategic planning, coordination, and investments. The following recommendations are critical paths for stakeholders to maximize the impact of this program. 

  • DOE should define the term “transformational” broadly

    DOE plans to award funding to projects that are “transformational,” but there are multiple ways a project could transform an industrial sector. One way is to demonstrate how to decarbonize a particular part of industrial processes, which could drive lower costs. However, there are other ways to be transformational. For example, if a project is located in a high industrial area, shared infrastructure such as carbon management or hydrogen networks that develops with or as a result of a project could be transformational. An industrial decarbonization project that allows for deep community engagement and real, targeted community benefits — chosen by the community itself — could also be transformational, as well as a project that pursues significant transparency and shared learnings.   

    DOE in its review, and industry after receiving funds, should look for multiple diverse ways to be transformative. DOE should select projects that are transformational across multiple of its program priorities wherever possible. On balance, however, the transformational potential to meet one program priority should not outweigh a project that underperforms in another category. For example, a project with a transformational approach to community engagement and community benefits should not be selected if it only has the potential for marginal decarbonization benefits; similarly, a project with deep decarbonization benefits should not be selected if it does not demonstrate a good approach for community engagement and community benefits. 
  • DOE should stay engaged and support projects to achieve their transformational goals

    To ensure funding from this program is transformative, DOE will need to stay engaged and look for opportunities to support developing projects. DOE should consider reserving $500 million to $1 billion (similar to the recently announced $1 billion demand-side mechanism as part of the Regional Clean Hydrogen Hubs program) to address challenges as they arise. For example, DOE could provide funding for a convening entity, technical assistance, or to support other challenges such as between buyers and sellers, which is part of the market viability focus of this program. 
  • Industry should prioritize collaboration, not competition

    DOE has signaled that it’s looking for industrial sectors to self-organize to tackle decarbonization. Yet businesses in the private sector are naturally reluctant to share information with competitors. We need a forum to overcome this challenge, and we need industry to voluntarily participate. Industrial sector stakeholders could collaborate on formal or informal convenings where they can discuss challenges collectively. Sharing challenges and opportunities transparently will benefit the entire industry. For example, industrial stakeholders need to consider how best to engage with communities and support community benefits.  
  • States should get in on the action

    State support of industrial decarbonization efforts can incentivize industry action, help lower costs, and provide conducive policy frameworks. To help states make the most of their limited capacity, federal agencies can highlight high-value opportunities and actions to support federal funding programs. Industry should also work with states to share if they are pursuing funding and share challenges that states could help address.  

Time to think big 

The IDP is a tremendous opportunity to advance deep emissions reductions, transparency, and community benefits in energy-intensive industries. This program is designed to be transformational and spur future investments, including partnerships between buyers and sellers. However, the funding must move quickly — both to meet the IRA funding deadlines, and to allow others in the industry to replicate lessons learned from the IDP that can help advance industrial decarbonization in time to meet U.S. decarbonization goals. CATF looks forward to continued engagement with public and private sector stakeholders on this transformative industrial decarbonization program. 

Learn more about industrial decarbonization opportunities at our U.S. Implementation Resource Hub: Unlocking Funding for Climate Action. You can find a list of IIJA and IRA funding opportunities for industrial decarbonization and more resources to support industrial decarbonization.

If you have questions about this program, please reach out to Holly Reuter.

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